Barclays 2011 Annual Report Download - page 44

Corporate governance report continued
Board Audit Committee Chairman’s Report continued
to uphold its independence and objectivity. To assess the performance
and effectiveness of the auditor, we carry out an annual assessment by
seeking views on PwC’s performance from key stakeholders across the
Group. The results of this assessment are reported to the Committee
each year and help inform the Committee’s discussion on whether the
auditor should be recommended for re-appointment. This includes
considering whether the audit should be tendered.
Following the assessment process described above, the Committee is
fully satisfied with the performance of PwC and has recommended to
the Board and to shareholders that PwC should be re-appointed as the
Group’s auditors at the AGM on 27 April 2012. PwC has signified its
willingness to continue in office.
Effectiveness
The performance of the Committee is reviewed each year as part of the
Board Effectiveness Review, both by the Committee itself and by the
Board as a whole. This year’s review concluded that the Committee
continues to operate effectively. Areas where we could enhance our
performance include ensuring that the form and content of information
presented to the Committee is appropriate given the Committee’s busy
agenda and we have put together an action plan to address the findings.
Looking ahead to 2012
For 2012, the Committee’s areas of focus will continue to be influenced
by the impact of the difficult economic environment and the changing
regulatory environment. In addition to ensuring we examine the impact
of external factors, we will be seeking to ensure that a strong governance
and control environment is maintained while the business undergoes a
period of internal reorganisation as it integrates the operations of Absa
and Barclays in Africa and seeks to deliver cost efficiencies and
operational excellence across the Group.
Sir Michael Rake
Chairman, Board Audit Committee
12
3
4
5
6
Board Audit Committee allocation of time
2011 2010
1 Control issues 4 8
2 Financial results 42 41
3 Internal audit matters 6 8
4 External audit matters 6 5
5 Business control environment 23 23
6 Other (including Governance
and Compliance) 19 15
%
Objectivity and independence of the external auditor
One of our key responsibilities is to monitor and review the objectivity
and independence of our external auditor. This includes having in
place a policy to govern the non-audit services that may be provided
by the external auditor, which sets out the circumstances in which the
external auditor may be permitted to undertake non-audit services.
Allowable services are pre-approved up to £100,000, or £25,000 in
the case of certain taxation services. Any non-audit service that
exceeds these thresholds requires approval from me as Chairman of
the Committee and must be robustly justified and, if appropriate,
tendered, before it is approved. I closely review all requests for
approval, particularly any which concern taxation-related services, and
specifically tax advisory services, where our approach is not to use the
auditor unless there is a very strong case for not seeking an alternative
supplier. The Committee receives a quarterly report on non-audit
services undertaken by the auditor so that it can monitor the types
of services being provided and the fees incurred.
A breakdown of the fees paid to the auditor for non-audit work may
be found in note 8 on page 212. Significant categories of engagement
undertaken in 2011 include regulatory audit work, where the work was
requested by our regulators in the UK and in South Africa and the use
of the auditor was agreed with them, and tax compliance services
in connection with our expatriate and international assignees, where
we have agreed to use an alternative supplier from 2011 onwards for
new assignments.
Further details of the non-audit services that are prohibited and
allowed under our policy can be found on our website.
Oversight of Internal Audit and External Audit
Internal Audit
We are responsible for monitoring the effectiveness of the internal audit
function and ensuring it is adequately resourced and focused on the
right issues. We also review and approve the annual Internal Audit plan.
During 2011, we received regular reports from Internal Audit, which set
out the Internal Audit function’s view of the control environment and
performance against any key indicators. Of particular focus was the need
to ensure that there is timely remediation of any audit findings. We also
specifically reviewed the resources available to the Internal Audit function
and any adjustments to be made to the Internal Audit plan, including
changes to methodology.
Internal Audit’s self-assessment of conformance, which we reviewed
in the fourth quarter of 2011, evidenced that the function generally
conforms to the standards set by the Institute of Internal Auditors.
External Audit
It is our responsibility to monitor the performance, objectivity and
independence of the external auditor and recommend to the Board the
appointment of the external auditor. We also agree the audit plan with
the external auditor to ensure that the areas of focus are appropriate.
PricewaterhouseCoopers (PwC) has been our auditor for many years,
although the lead audit partner is rotated every five years. The current
lead audit partner joined the audit team for the 2010 year end and will
retire after the 2014 year end. The appointment of PwC as auditor is
subject to shareholder approval each year at the AGM, giving
shareholders the opportunity to accept or reject the Board’s
recommendation that they be reappointed. In terms of auditor
independence and objectivity, we have a policy that governs non-audit
services provided by the auditor, which is described above. PwC also
provides specific assurance to us on the arrangements it has in place
42 Barclays PLC Annual Report 2011 www.barclays.com/annualreport